Ch 3- Ethics & Conduct

Question 1

5 Principles

Answer 1

Integrity. - Straightforward & honest
Prof competence and due care. -Maintain knowledge and skills
Prof behaviour. -Comply with regs and don’t discredit profession
Objectivity -No conflict of interest or bias
Confidentiality -Info must not be disclosed without authority

Question 2

Safeguards for breach of ethics

Answer 2

-Discussing matters
-ACCA helpline
-Legal advice
-Firms internal formal dispute resolution or whistleblowing policies
-Contact HR dept

Question 3

Safeguards for threats to independence

Answer 3

Either eliminate threat:
-step away, resign

Reduce to an acceptable level:
-Confidentiality agreements
-Engagement quality review
-Discuss with ethics partner

Question 4

THREATS & SAFEGUARDS
(TASER)

1- Threats
2-Assess significance (on auditor/firm)
3-Safeguards (what to do)
4- Eliminate or reduce

Question 5

Self-interest- Interest that will influence auditors judgment (financial bonus)
Advocacy - Promoting client position (i.e. in court)
Intimidation- Pressures from client
Familiarity - Too close or trusting of client (loses professional scepticism)
Self-review- Own work

Question 6

Auditors must not assume MGMT rights for client:
-Setting policies/ internal controls
-Employment decisions
-Authorising transactions and decision implementations

Auditors must ensure MGMT is capable of understanding issues and advising board.

Question 7

Notes:

1-Fee levels should not exceed (10% listed). (15% non-listed)
2-Gifts and hospitality- Only accept if trivial and inconsequential
3-Audit partner rotation. (5 years listed). (10 years non-listed)